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On 1 July 2021, some of the most significant changes to Australia's super system in years came into effect. And, as an employer, it's important to understand your new responsibilities to your employees.
The Government's super reform package known as Your Future, Your Super, contains four key components:
However, it's the ‘stapling’ component that's likely to have the most effect on your responsibilities to employees.
What is fund stapling?
A stapled fund is a super account that is linked or ‘stapled’ to an individual employee, which follows them as they change jobs. From 1 November 2021, any time employees move to a new employer, they must be offered choice of fund. If an employee doesn't choose a super fund when they change jobs you, as their employer, will be required to contact the ATO and ask for information about their stapled fund. If they don't choose a fund, and if they don't have a stapled fund, you will need to pay their super contributions into your company's default fund.
It is important to note that these requirements apply to all new employees, even if a current enterprise agreement or workplace determination specifies that all contributions are to be made to a particular fund.
Before 1 November 2021, employees needed to notify their new employer if they wanted to stay with their chosen fund. Stapling aims to reduce people having, and paying fees for, multiple super accounts they don't need. It also means a new account isn't automatically created every time an employee starts a new job.
Employees can still nominate a preferred fund at any time using a Choice of Fund form. If they do this, you'll need to pay their super contributions into their chosen fund.
While it's up to your employees' super fund to communicate the changes to them, as their employer, they may come to you with questions.
To ensure you comply with your legal obligations, the Australian Securities and Investments Commission (ASIC) has provided a list (summarised below) on what you, as an employer, can and cannot do when communicating with your employees about their super options. If you fail to comply, ASIC can take action against you and penalties may be applied.
After their own home, super is generally the largest asset someone will own. So, any decisions employees make can greatly affect the amount they have when they retire. As an employer, it's important that you don't communicate information or take any action that is inappropriate as you could risk breaking the law and it also may have adverse consequences for an employee’s retirement savings.
This document has been prepared by IOOF Investment Management Limited (IIML) ABN 53 006 695 021, AFS Licence No. 230524 as Trustee of the IOOF Portfolio Service Superannuation Fund ABN 70 815 369 818 (Fund). IOOF Employer Super is a Division of the Fund. IIML is part of the IOOF Group of companies, consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Please obtain and consider the PDS before making any decision about whether to acquire a financial product. Information is current at the date of issue and may change.